Tag: risk

GE shares jumped 12 percent in premarket trading to $7.41 from Wednesday’s close of $6.71 a share. GE shares fell as low as $6.66 this week, which was their low close during the financial crisis. GE cut its dividend to a penny officially last week, a move which alienated many of its longtime shareholders. Tusa said in the note that he sees “upside risk” to the stock of $8 and “downside risk” of $5. In the meantime, J.P. Morgan is holding to a GE price target of $6 a share.

Longtime bearish analyst Stephen Tusa of J.P. Morgan upgraded shares of General Electric to neutral from underweight on Thursday and removed the stock from the firm’s short idea list, saying the embattled industrial giant now has a more “balanced risk reward at current levels.”

“Key to the story, in our view, is the outcome of ‘known unknowns’ in near term, which are better understood and around which debate is more balanced, as opposed to being overlooked by most bulls in the past,” Tusa wrote in a note Thursday.

“We now believe a more negative outcome one these liabilities (equity dilution is one) is at least partially discounted, and it’s possible the company can execute its way through an elongated workout that limits near-term downside,” Tusa added.

GE shares jumped 12 percent in premarket trading to $7.41 from Wednesday’s close of $6.71 a share.

Tusa put out a bearish note on GE in May 2016 when the stock was above $30 that questioned the conglomerate’s earnings and cash flow outlook. As the shares plummeted, Tusa gained a following on Wall Street with his later calls, such as that the dividend would have to be cut, coming true. His notes on the company will often move the stock on the days they come out.

GE shares fell as low as $6.66 this week, which was their low close during the financial crisis. GE cut its dividend to a penny officially last week, a move which alienated many of its longtime shareholders.

Tusa said in the note that he sees “upside risk” to the stock of $8 and “downside risk” of $5. In the meantime, J.P. Morgan is holding to a GE price target of $6 a share. Tusa said the firm is “increasingly assuming a material equity raise could be necessary.”

“While we think there would be near-term downside, we also think there could be support at a lower level, and likely a benefit of the doubt for new management with a higher multiple on lower earnings and [free cash flow],” Tusa added.

GE has repeatedly denied it has plans for an equity raise. Culp said last month that questions about GE’s liquidity are understandable given the company’s position. But he said the “fact the we got $20 billion of cash” on hand from asset sales gives Culp confidence that GE has the leverage it needs to forge a turnaround.

More than four hundred investors have urged governments to act on climate change or risk the stability of their financial systems. Lobby group The Investor Agenda (IA) issued a statement on Monday on behalf of 415 global investors, who collectively manage $32 trillion. The Paris Agreement was drafted in 2015 and set out targets to help international economies work towards reducing carbon emissions. Signatories of Monday’s statement agreed that lawmakers needed to address climate change “with urg

More than four hundred investors have urged governments to act on climate change or risk the stability of their financial systems.

Lobby group The Investor Agenda (IA) issued a statement on Monday on behalf of 415 global investors, who collectively manage $32 trillion.

The statement called on world governments to step up their efforts on achieving the goals of the Paris Agreement and commit to improve climate-related financial reporting. The IA also urged leaders to drive investment into low-carbon energy by taking action such as phasing out coal worldwide.

The Paris Agreement was drafted in 2015 and set out targets to help international economies work towards reducing carbon emissions.

Signatories of Monday’s statement agreed that lawmakers needed to address climate change “with urgency,” and warned that failing to act would create significant risks for the global economy, financial system and society.

“It is vital for our long-term planning and asset allocation decisions that governments work closely with investors to incorporate Paris-aligned climate scenarios into their policy frameworks,” the cohort said.

“The countries and companies that lead in implementing the Paris Agreement and enacting strong climate policies will see significant economic benefits and attract increased investment that will create jobs in industries of the future.”

The investors behind the statement include some of the world’s biggest insurers, pension funds and asset managers. A statement was originally drawn up in July but was reissued this week with backing from a record number of signatories, in conjunction with the COP24 summit on climate change in Katowice, Poland.

The Investor Group on Climate Change, whose members manage around $2 trillion in Australia and New Zealand, was one of the organisations driving support for the statement. CEO Emma Herd said in a statement in July that Group of 20 (G-20) leaders needed to set policies that provided investors with certainty to fund a secure and affordable low-emissions energy system.

Gordon, a senior portfolio manager on the firm’s technical asset allocation strategies team, blames uncertainty surrounding the U.S.-China trade war and Federal Reserve policy for the violent market swings. “The first and fundamental question: Is this a correction or is this the start of the bear market? While you can certainly see a path that could get us to a bear market, I think it’s more of a messy correction,” he told CNBC’s “Trading Nation” on Friday. He believes the correction will span a

“The first and fundamental question: Is this a correction or is this the start of the bear market? While you can certainly see a path that could get us to a bear market, I think it’s more of a messy correction,” he told CNBC’s “Trading Nation” on Friday. “We could go a little deeper.”

Gordon’s comments came as the major indexes got hammered. The Dow, S&P 500 and Nasdaq saw their worst weekly performance since last March. The S&P closed back in correction territory, down more than 10 percent from its September 21 all-time high.

He believes the correction will span about two to four months, citing the end of the 90-day trade war ceasefire between the U.S. and China as an important marker.

Trade has been Gordon’s major risk factor for U.S. stocks for much of the year. In late June on “Trading Nation,” he placed the U.S.-China tariff threat as a major economic risk in the second half of 2018. And, that issue has played a big role in the painful pullback.

“You could have full on global growth slowing as a result of a complete breakdown in the trade and tariff negotiations,” he said, even though it’s not his base case.

Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion. Spot gold was up 0.2 percent at $1,239.86 per ounce, as of 0429 GMT, while U.S. gold futures were 0.2 percent higher at $1,244.9 per ounce. “Markets are trying to consolidate, trying to push up higher for now,” said Benjamin Lu, a commodities analyst with Phillip Futures. The dollar declined against the safe-haven yen as a spike in risk aversion pressured equitie

Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion.

Spot gold was up 0.2 percent at $1,239.86 per ounce, as of 0429 GMT, while U.S. gold futures were 0.2 percent higher at $1,244.9 per ounce.

“Markets are trying to consolidate, trying to push up higher for now,” said Benjamin Lu, a commodities analyst with Phillip Futures.

A balance between a host of factors such as a rate hike by the U.S. Federal Reserve in December, uncertainty about trade tensions between Washington and Beijing, and a flattening yield curve has helped create a premium for the bullion, Lu added.

Fed policymakers will gather at a Dec. 18-19 meeting, at which the central bank is widely expected to raise interest rates.

“Although a rate hike is already priced in, markets will be closely watching the meeting for clues on rate hike timings in 2019,” said Lukman Otunuga, a research analyst at FXTM, adding that: “if the meeting echoes a similar message to (Chairman Jerome) Powell’s dovish shift, gold has the potential to shine into 2019.”

The dollar declined against the safe-haven yen as a spike in risk aversion pressured equities and U.S. Treasury yields. The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates.

“An yield curve inversion indicates higher borrowing cost in short term, so for safe-haven assets in the longer run it’s going to be very positive,” Phillip Futures’ Lu said.

Spot gold may test a resistance at $1,245 per ounce, a break above which could lead to a gain into a range of $1,253-$1,258, according to Reuters technical analyst Wang Tao.

Meanwhile, palladium continued to be more valuable than gold after outshining the yellow metal for the first time since 2002 on Wednesday, with prices soaring by around 50 percent in less than four months to record levels.

Spot palladium rose 0.1 percent to $1,245.00 per ounce, hovering near its record high hit in the previous session.

The market now awaits Friday’s U.S. non-farm payrolls data for November, which is expected to show unemployment remains at 3.7 percent.

“Investors are seen adopting a cautious stance ahead of the U.S. jobs report which could offer insight over the health of the U.S. labour force,” said FXTM’s Otunuga.

Amongst other metals, silver fell 0.7 percent to $14.41 per ounce, while platinum extended losses into a third session, declining 0.7 percent to $795.00 per ounce.

Wakatabe, a vocal advocate of aggressive monetary easing, said it was important to maintain the BOJ’s massive stimulus program to ensure the economy remains strong enough to nudge up prices and wages. “Doing so would enhance the sustainability of our policy and heighten the chance of achieving 2 percent inflation.” As an academic, Wakatabe had repeatedly called for stronger steps to drive up inflation. If downward pressure is exerted on the economy again, it may revert to deflation,” Wakatabe sa

Bank of Japan Deputy Governor Masazumi Wakatabe said on Wednesday the country could slide back into deflation if the economy comes under downward pressure again, highlighting risks such as the fallout from U.S.-China trade frictions.

Wakatabe, a vocal advocate of aggressive monetary easing, said it was important to maintain the BOJ’s massive stimulus program to ensure the economy remains strong enough to nudge up prices and wages.

But he noted the central bank would be vigilant to the side-effects of prolonged easing, as its huge purchases dry up bond market liquidity and near-zero interest rates hurt financial institutions’ profits.

“It’s necessary to continuously examine not only the effects of our policy on inflation, but also the impact on financial markets and the banking system,” Wakatabe said in a speech to business leaders in Niigata, northern Japan.

“Doing so would enhance the sustainability of our policy and heighten the chance of achieving 2 percent inflation.”

As an academic, Wakatabe had repeatedly called for stronger steps to drive up inflation. But he has toned down his demands for more stimulus since joining the BOJ board in March.

The central bank is now at a crossroads because it has been pursuing radical quantitative easing for more than five years with only mixed results.

Wakatabe said while Japan’s economic expansion would continue, it faced various risks such as the effects of next year’s scheduled tax hike to 10 percent from 8 percent and the U.S.-China trade dispute.

“Japan is only half way to achieving 2 percent inflation. If downward pressure is exerted on the economy again, it may revert to deflation,” Wakatabe said.

“The BOJ will seek to accelerate inflation to levels deemed appropriate for the economy by continuing large-scale monetary easing,” he said.

A body representing 50 airlines has written to the European Commission warning that it must take urgent action to prevent the grounding of flights after the U.K. leaves the European Union. “It won’t, it can’t, and the U.K. and EU need to wake up to that fact now, before it’s too late.” The U.K. is due to depart the EU on March 29. The letter to officials in Brussels claimed that a “no-deal” Brexit could have “disastrous consequences,” impacting routes, aviation safety and border security. The ER

A body representing 50 airlines has written to the European Commission warning that it must take urgent action to prevent the grounding of flights after the U.K. leaves the European Union.

“We get the sense from the politicians and officials that on the morning of March 30, the aviation industry will wake up and go to work as usual, even if there is a hard Brexit,” Andrew Kelly, president of the European Regions Airlines Association (ERA), said in a press release on Tuesday.

“It won’t, it can’t, and the U.K. and EU need to wake up to that fact now, before it’s too late.” The U.K. is due to depart the EU on March 29.

The letter to officials in Brussels claimed that a “no-deal” Brexit could have “disastrous consequences,” impacting routes, aviation safety and border security. The ERA has estimated that 1.8 million routes across Europe will be affected in the event of a no-deal Brexit.

A looming risk in next jobs report could tear into stocks, Invesco warns 3:49 PM ET Thu, 29 Nov 2018 | 02:04Invesco’s Kristina Hooper is concerned Wall Street is ignoring a major risk: Wage growth. But it may reclaim the spotlight as soon as Friday when the government releases its November jobs report. It cares about core inflation,” the firm’s chief global market strategist said Thursday on CNBC’s “Futures Now.” Hooper predicted trouble if wage growth mounts, because Wall Street uses it to dete

Invesco’s Kristina Hooper is concerned Wall Street is ignoring a major risk: Wage growth. But it may reclaim the spotlight as soon as Friday when the government releases its November jobs report.

Hooper believes if the number ticks up too high, it could hint at price pressures that may shift the Federal Reserve’s thinking on rates, and ultimately disrupt the bull market even more.

“Many have said we don’t have to worry about inflation right now because look at where oil prices are. That’s taking pressure off markets. But as we know, the Fed doesn’t care about headline inflation. It cares about core inflation,” the firm’s chief global market strategist said Thursday on CNBC’s “Futures Now.”

The Labor Department reported in October wages and salaries grew 3.1 percent in the third quarter — the biggest increase in a decade. Hooper predicted trouble if wage growth mounts, because Wall Street uses it to determine whether inflation is picking up momentum.

“It means that the Fed has less flexibility to take its foot off the accelerator” on rate hikes, said Hooper.

In its Financial Stability Report, the Fed noted that the share of investment-grade debt classified at the low end of the range has “reached near-record levels” of $2.25 trillion, or about 35 percent of total corporate bonds. Many fixed-income investors have been focused in recent years on duration risk: As the Fed began to raise rates and send bond prices down, investors fled from longer-dated bonds. But the Fed noted that the credit quality of nonfinancial high-yield corporate bonds has been r

In its Financial Stability Report, the Fed noted that the share of investment-grade debt classified at the low end of the range has “reached near-record levels” of $2.25 trillion, or about 35 percent of total corporate bonds. The Fed’s analysis of balance sheets at companies with debt in this rating tier indicated that over the past year, it has been firms with high leverage, high-interest expense ratios, and low earnings and cash holdings that have been increasing their debt loads the most. The report also warned of a potentially “large plunge in asset prices” and indicated that financial distress could “‘trigger a broad adjustment in prices of business debt,” with investors taking “higher-than-expected losses.”

In the minutes from its Federal Open Market Committee, the central bank said several of the FOMC members were concerned about “the high level of debt in the nonfinancial business sector.”

Many fixed-income investors have been focused in recent years on duration risk: As the Fed began to raise rates and send bond prices down, investors fled from longer-dated bonds. Credit-quality concerns, meanwhile, were centered on areas of the bond market known to be more risky, such as high-yield and emerging markets. But the Fed noted that the credit quality of nonfinancial high-yield corporate bonds has been roughly stable over the past several years, as ratings among investment-grade corporate bonds has deteriorated.

“So even if a severe economic downturn does not appear to be on the horizon, investors need to be aware of credit risks associated with their investment-grade bond ETFs, in addition to duration risk,” said Neena Mishra, director of ETF research at Zacks Investment Research. She said that while the economy is growing at a healthy pace, as of now, and risks of a recession in the near term appear to be low, the surge in issuance of bonds rated BBB has become a serious concern. In the event of a downturn in the economy, we could see a wave of downgrades to junk status from the lowest investment grade.

The composition among ETFs “looks worse” for intermediate-term investment-grade bond ETFs, such as Vanguard’s VCIT and the $5.5 billion iShares Intermediate-Term Corporate Bond ETF (IGIB), which have about 54 percent of their portfolio invested in BBB/Baa rated bonds, making them most vulnerable in the event of even some of these bonds falling to high-yield status.

“These ETFs would have to dispose of those fallen angels, further exacerbating the price decline and leading to a lot of volatility,” Mishra said.

The Fed noted in its report that in an economic downturn, “widespread downgrades of these bonds to speculative-grade ratings could induce some investors to sell them rapidly, because, for example, they face restrictions on holding bonds with ratings below investment grade. Such sales could increase the liquidity and price pressures in this segment of the corporate bond market.”

But the central bank also stated, “With interest rates low by historical standards, debt service costs are at the lower ends of their historical ranges, particularly for risky firms, and corporate credit performance remains generally favorable.”

Lyons at CreditSights doesn’t see systematic risk to investment-grade bonds right now, though she remains concerned and stressed that the issues go beyond any single stock that has made headlines for deterioration in credit quality, such as GE or Pacific Gas & Electric. “The amount of debt is getting bigger and bigger, while the ability to trade is diminishing. We are getting more cautious,” she said.

A BlackRock spokeswoman said to the extent that there are downgrades from BBB to high yield, those bonds would be gradually removed from the fund, and the risk to investors is potential credit losses associated with BBB downgrades as they are sold from the fund overtime. But she noted that LQD holds over 1,900 bonds, 390 distinct issuers and a 3 percent issuer cap, so it is well diversified.

Vanguard could not provide a comment by press time.

Lyons said CreditSights is not presently of the belief that the cracks in the BBB bond class are widespread, but there will be specific sectors represented within it where more stress should be expected. “I’m not that worried about a massive wave of downgrades,” she said.

What could change that view, however, is if ratings agencies decide to react by changing the terms for investment-grade ratings. “They’ve given companies a lot more leeway,” she said, and widespread downgrades could occur if the ratings agencies decide to become more stringent. It has happened before, and recently, with the energy sector being downgraded in early 2016 by the rating agencies. Though Lyons added, “I’m not seeing anything breaking the fundamentals of corporates. They are slowing, but not to the point where I am worried about defaults. It comes back to the agencies and slowing growth and how they react to it.”

One of the worst-case scenarios would be someone forging a passport with your number, leading to criminal identity theft. That risk is likely low, said David Kennedy, chief executive of TrustedSec, a white hat hacking and cybercrime investigations company. “There’s not much that can be done with a passport number alone, as long as you have the actual passport in your possession,” said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse. Renewing your passport woul

One of the worst-case scenarios would be someone forging a passport with your number, leading to criminal identity theft. That risk is likely low, said David Kennedy, chief executive of TrustedSec, a white hat hacking and cybercrime investigations company.

“There’s not much that can be done with a passport number alone, as long as you have the actual passport in your possession,” said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse.

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Concerned consumers should reach out to the State Department to determine next steps, which might entail reporting that passport as lost or stolen, Velasquez said. Renewing your passport would also result in a new number, Kennedy said.

In an emailed statement to CNBC, the State Department said that it was aware that some individuals’ passport numbers may have been disclosed in the Marriott breach, but that compromised passport numbers could not be used by the thieves for travel or to access any State Department records on that citizen.

“With respect to U.S. passports, we would like to assure U.S. citizens that the U.S. passport book and passport card are highly secure documents with numerous security features designed to prevent successful counterfeiting,” the State Department said, in a statement.

The bigger risk for consumers is that combined with other data — including many of the other elements compromised in the Marriott/Starwood breach — having that passport number helps criminals build a profile of you that could be used to perpetuate other kinds of fraud, Stephens said.

Those credentials could be used to verify your identity to open new accounts online, or gain access to existing ones. All the more reason to take steps such as enacting two-factor authentication and setting up unusual transaction alerts on existing accounts, and freezing your credit to prevent new accounts from being opened.

Kressley stated that one way to make a room look great, if you’re on a tight budget: Paint. “It’s by far the biggest bang for your buck design tool. It also allows you to take a bit of design risk without a big financial risk,” Kressley told CNBC. Filicia added: “Put your money into the things you’ll live with a long time (sofa, bed, dining table etc.) “So you look kind of inward, you look at yourself and your architecture and your own point of view, and that should be your springboard.”

Kressley stated that one way to make a room look great, if you’re on a tight budget: Paint.

“It’s by far the biggest bang for your buck design tool. It also allows you to take a bit of design risk without a big financial risk,” Kressley told CNBC.

Filicia added: “Put your money into the things you’ll live with a long time (sofa, bed, dining table etc.) and have fun with the things that are more temporary (accessories, pillows, etc).”

The interior decorator said to think of interior design like fashion. If you invest in a great pair of shoes that you plan on having for a long time, you can pair that with a T-shirt and jeans, and still look fabulous.

“When it becomes the design part….that’s really about your personality your sensibility, your aesthetic. It becomes very personal and people become paralyzed,” Filicia said.

If you’re not sure what your style might be, The co-hosts say take cues from your closet. Kressly explained that “If everything is roughly in floral and kind of bohemian then you might want a shabby chic kind of vibe.”

Filicia added that using apps like Pinterest are also helpful. Users can create vision boards, and pin pictures of items that catch their eye.

“If you use that heart feature and you start liking things that are on a design retailer’s site or even a Pinterest, you’ll eventually start to see a through line,” says Kressley.

But it’s not just your personal style that factors into a good design.

“Understand the location of the home, the architecture, your lifestyle, your point of view, how you want to use the space, how you entertain and live and then you start connecting those dots, Filicia said. “So you look kind of inward, you look at yourself and your architecture and your own point of view, and that should be your springboard.”

On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.